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Green Circuits' Joe O'Neil and Joe Garcia on the Best Kept Secret
November 12, 2018 | Nolan Johnson, I-Connect007Estimated reading time: 16 minutes
O’Neil: That's an interesting observation. It's almost 98% mechanical and aesthetics, and about 2% electronics. In terms of the engagement, the quality control is almost an artist that comes in and says, "Yes, it looks and feels correct," and off it goes. The majority of what we do is still ones and zeroes. It's rigorous as well as repeatable—it's electronics with high-degree tests. The mechanical piece and interface tend to be once and done, whereas the electronics seems to be more iterative and have more revisions through its life.
Johnson: That makes sense.
O’Neil: Where the OEM teams get into trouble is when they do all these revisions and then hide their mechanicals—the two things don't fit. Now you're ready to ship to the Christmas market but you're not going to hit it because you didn't do the two pieces in the same place at the same time.
Johnson: Right. They changed the function, but accidentally changed the fit and the form too.
O’Neil: Historically we didn’t interface as often with the mechanical people in a project, but it is part of that cycle. It's an interesting shift.
Johnson: Where are you looking to grow? What are you focusing on here at Green Circuits?
O’Neil: We have a strong sales force that's spread across the country. We're looking to grow that. We've been somewhat surprised at the willingness of OEMs from the East Coast and the Midwest who are very happy and increasing their business levels with us. We thought we would be successful with small steps, but we're finding that that's more universal in appeal.
Where we are successful is our depth of engineering knowledge and process engineering, service, and believe it or not, the pricing that we offer. It's the efficiency and overhead absorption that allows us to be competitive, even with a high labor expense and cost environment. If you put processes in place, have as much automation as possible, and move quickly, you can do this efficiently. That's helped us pull from the East Coast. Now, we’re strategically narrowing down the filter to find customers that may not know about us. We're very reactive, so we're going be more proactive in terms of that engagement.
Johnson: How do you see that going?
O’Neil: The danger is in taking a strategy where one over aims. We found attributes and areas for success—medical, equipment, etc. In doing that granularity, you can miss entire industries that didn't exist three years ago that have that same need for, "Okay, what are those attributes? They’re high reliability, high-mix low-volume, and even in full rate production.” You know, the stuff that should remain domestic, have intellectual property (IP) concerns, or their risk profile would cause them to look for a partner—not just a throw-over-the-fence supplier.
We like to be a partner through good and bad times. We like to know enough about our customers that when they have a challenge in their business, if we can help it, we're going to facilitate those relationships so that we're more than just one of the suppliers they have. We don't want to over aim. We know the attributes that make those target customers that are looking for the type of thing that we bring.
Johnson: There's not a lot of pinpoint aiming, but more of a larger process of figuring out where the growth markets are and starting to pay attention to that. You’re also paying attention to who is coming to you and why. You learn from that so you can reach out to other customers who may have the same profile or need.
This circles back to a couple of things that I think we've already touched on. You have more customers coming out of the East Coast and other regions than you might expect, and they're coming for something larger than what you traditionally did. They're pushing you to grow your expertise wider than just electronics assembly, which is probably coming from some sectors you didn't expect. Sitting here today and looking at all that, what does that tell you about the market growth? Where are you feeling like you want to start paying more attention?
O’Neil: It's a nice place to be in terms of that diversification. There's some data that you look at and get concerned about, like ratios: "This high business cycle has gone on longer than ever before." The last time that happened, it got bad quickly, but we don't see it coming from one specific area; it's coming from a lot of places. Electronics is very pervasive across all parts of our lives on both the consumer and industrial side.
We just need to do a good job of listening to our customers for where their pain points are, and figure out if it's an opportunity for us to continue to expand wider or deeper. If we do the basics very well and keep improving every day, you can have a leadership position in the industry.
Johnson: Let's talk a little bit about some of the challenges you may be working to help your customers through. Some big shifts are going on with electronics. Electronics are showing up in everything—tires, cars, everywhere. The automotive and cellular communications sectors are huge, and they're applying some very big levers to the supply chain. How is that affecting what you're doing for your customers, and how are you adapting?
O’Neil: Component shortages are forcing some disciplines that in different markets you can get sloppy with. We do a lot of service-based reactive jobs: "I know I said I needed 20. Now I need 200 or 400." No visibility, just hustle. We can pivot and hustle a lot and will try to, but sometimes it just isn’t there. You can't just push harder to get it.
Johnson: You can't hustle an 80-week lead time.
O’Neil: Exactly. The visibility is so we can manage our business and your request. We're a supply chain. It's not to make my life easier, but to make all of our lives possible. It's a driving discipline forcing some of that to happen. Some of it we were in front of, and some of it we're back to hustle. It's an opportunity to get creative because it puts everything in a place where Joe and I have been.
This business belongs in an open-book type of environment where we all know what the drivers are. We're not negotiating for every dollar that we're selling; the majority of the pennies are going to a third party for materials. We're on the same page with our customers in terms of how we can get more efficient and drive.
Do we want to put it in a stocking program or just have materials on hand? What safety stock and subassembly levels make sense? It's much easier to have those versus, "I can show you a little bit of data, but I can't show you all the data." I think the industry does a lot of that still. The cycle may force some of that out of it—which I think is probably healthy—but it's an opportunity for a company that does have adequate resources to thrive.
Johnson: As you're dealing with these challenges and you have customer design teams who could be very much affected by this, how do you counsel them? What advice do you give them to make this better?
O’Neil: We have customers who provide us with great forecast and visibility, and customers who don't. We’ll take historical data, ask for a directional market up or down, and come back with a whole program proposal that says, "This is what we based our assumptions on. We can change any of these details, but here's what we recommend."
It's never perfect because they're forecasts, but we at least can understand that this is the risk we're taking. We convey dollar amounts and can change the variables and work the model to get to something that allows us to sleep at night. Without doing that, I don't know how you would sleep at night.
Johnson: It sounds like one of the things that you're doing is helping teach your less disciplined customers how to be more disciplined to assist you.
O’Neil: We are closer to the reality of this material shortage impact, and it's our job to make sure that customers’ work is part of that outsourcing. They're removed from that battle, and when the changes come up, it's up to the suppliers and their partners to tell them. If anyone is surprised by it, that doesn't reflect well on their supply chain.
Johnson: Right. Are you feeling the effects of the tariff issues?
O’Neil: Somewhat, but mostly in a positive way. It goes back to the beginning of the year before there were tariffs. Customers were saying they were looking at exploring trial options at derisking some of that. They weren't saying why or what was up, but we saw a lot of it, which was interesting. I thought it might have been currency concern or something else driving that, but then the tariff piece became a little more socialized, and now there's a lot moving.
It's not necessarily just flooding back to the United States by any stretch of the imagination, but there's some rationalization to a new product launch if you look at other geographies. Maybe we don't ramp a 200 system a year complex program in China because that's where the herd was going. Now there's a little more rationalization for me to build in the region—maybe we can look at the total cost. Sometimes that math means Mexico, Vietnam, or the U.S. By no means should everything be built here or there only. At least we look at the options. For a while, it was Asia or nothing, and it got a little irrational in that direction. The tariff piece seems like it's getting a little irrational back, but we'll take that for a little while. Then, it will settle down and probably balance out.
Johnson: Would you expect that you're going to see more of that business coming back to the U.S. in general?
O’Neil: We see a tremendous amount of opportunities. I don't know if it's all been good, however. Some of it is, such as a move out of China, which is raising the bar. Further, the capacities are getting filled in places like Mexico, which is having another effect of pushing it back. So, it is helping domestically. It will normalize itself, but right now, the OEMs need to outsource because they're growing and can't find employees. Outsourcing has increased. The tariff piece is pushing the largest manufacturing region on the globe off a lot of lists. They need someone who is dynamic, service-based, and can react and get creative on the material side. Those things are all coming together, and we're a busy group.
Johnson: It creates a lot more opportunity to have conversations with somebody as a customer to tell your story, pitch your value, and close some deals.
O’Neil: Absolutely.
Johnson: How would someone get involved with Green Circuits?
Garcia: We're doing a BIOMEDevice show December 5–6 in San Jose, California, so we'll have a presence there. Other than that, feel free to contact me.
Johnson: Perfect. Thank you for your time.
Garcia: Thanks, Nolan.
O’Neil: Thank you.
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